Selecta. Going Long SSNs At 95.375 (7.2% YTW) & Selling 5y CDS At 474bps  Massimiliano Zanetti Bottarelli & Rupesh Tailor, Everest Research, 3 March 2020 We published a deep dive last week on Selecta, the European unattended self-service retail market leader, and now see an attractive opportunity to go long risk via both the Senior Secured Notes (SSNs) and 5 …

OHL. Take Profits Following FY 19 Results James Moylan & Rupesh Tailor, Everest Research, 28 February 2020 FY 19 results saw negative valuation adjustments on key assets we expect to be sold (Old War Office, London) and alternatively monetised (Canelejas, Madrid) and ongoing uncertainty on the ownership structure. Whilst we remain constructive on OHL’s turnaround (of which there were positive …

Aldesa. China Railway To Take 75% Stake. CoC Put At 101. Buy James Moylan & Rupesh Tailor, Everest Research, 27 December 2019 Aldesa announced late yesterday that, on 25/12/19, it “entered into an investment agreement with CRCC International Investment Group (CRCCII), a wholly-owned subsidiary of China Railway Construction Corporation Limited (CRCC)”, one of the largest construction companies in the world. …

Pro-Gest – Deadline To File Counter-Arguments On Mantua Plant Increased EIA Authorization Extended. Buy Massimiliano Zanetti Bottarelli & Rupesh Tailor, Everest Research, 30 October 2019 According to the local newspaper “La Gazzetta di Mantova” (see here), Pro-Gest has been granted a further extension by the Province of Mantua to file its counter-arguments to the rejection of its application for an …

Lecta – Liquidity Intact, Senior Secured Close To Liquidation Recovery Value. Buy James Moylan & Rupesh Tailor, Everest Research, 4 September 2019 Lecta held its Q2 2019 results call yesterday, highlights of which we provide below (overall positive in our view). In our note on 2/9/19, we recommended buying Lecta € 6.5% 2023 senior secured notes at a price of …

Thomas Cook – Fosun, Anex Or Bust? Rupesh Tailor, Everest Research, 7 August 2019 Thomas Cook’s share price has risen 2.2x over the past 5 trading sessions to stand now at c. 9.9p per share (market cap c. £152m). This rally coincided with the first time disclosure on 30/7/19 of a stake in Thomas Cook held by the Turkish investor, …

Jaguar Land Rover – Between A Rock And A Hard Brexit George Flynn, Everest Research, 6 August 2019 Jaguar Land Rover’s (JLR) results for Q1 2020 were weak. EBIT margin at -5.5% was 180 basis points lower yoy. Adjusted leverage stood at 2.95x vs 1.12x at Q1 2019. FCF excluding the draw on the receivables finance facility was c. -£1bn …

Salini – Pro Forma Net Leverage 2.3x James Moylan & Rupesh Tailor, Everest Research, 6 August 2019 On 2/8/19 Salini announced the launch of “Project Italy” aimed at “strengthening the national sector of public works and construction” (see here). From Salini’s perspective, the major components are: (1) Salini’s own EUR 600m equity raise, now committed; and (2) Salini’s acquisition of …

Aldesa – Press Reports: RCF Lenders Agree Extension; In Discussions For Private Debt To Refinance Bonds? James Moylan & Rupesh Tailor, Everest Research, 1 August 2019 El Confidencial has today reported (see here) that Aldesa’s five RCF lenders have agreed to extend Aldesa’s EUR 100m RCF from May 2020 to January 2021, just prior to the maturity of Aldesa’s EUR …

Pizza Express – Senior Secured Bondholders, How Safe Are You? Neil Tailor & Rupesh Tailor, Everest Research, 31 July 2019 Background   In our note of 21/6/19, we initiated on Pizza Express with an Avoid recommendation on both Pizza Express £ 6.625% 2021 senior secured at a price of 88.46 (13.1% YTW) and on the Pizza Express £ 8.625 2022 …

Thomas Cook – £750m Recapitalisation & Debt Restructuring Plan Rupesh Tailor, Everest Research, 12 July 2019 We outline below the key elements of Thomas Cook’s £750m recapitalisation and debt restructuring plan announced this morning (see here). We will publish shortly our initial thoughts on implications for Thomas Cook’s senior unsecured bonds, RCF and equity and how the proposed debt restructuring …

Thomas Cook – Popular Questions…& Our Answers Rupesh Tailor, Everest Research, 19 June 2019 Following on from our note on Thomas Cook published on 4/6/19, we take the opportunity to address in this blog post some of the common questions we have received from investors. Following our buy recommendation at a price of 37.12 on Thomas Cook’s 6.25% 2022 senior unsecured …

Aldesa – Self-Help & Other Options James Moylan & Rupesh Tailor, Everest Research, 19 June 2019 In our note published today, we look at what self-help and potential out-of-court “voluntary” restructuring options may be available to Aldesa to guide it past its forthcoming EUR 245m April 2021 senior secured notes maturity given the set back on working capital / FCF …

Thomas Cook – c. £1.9bn Base Case Break-Up Enterprise Valuation Rupesh Tailor, Everest Research, 10 June 2019 As per our note from last week, we see a going-concern break-up of Thomas Cook as more likely than a near term administration or CVA. Our base case break-up enterprise valuation (see/expand charts below) of Thomas Cook comes out at c. £1.9bn, leaving …

Thomas Cook – Fosun Talks Confirmed  Rupesh Tailor, Everest Research, 10 June 2019 Thomas Cook has this morning confirmed weekend press reports “that it is in discussions with Fosun following receipt of a preliminary approach [to acquire Thomas Cook’s tour operator business]” but with the customary caveat that “there can be no certainty that this approach will result in a …

Thomas Cook – Fosun In Talks To Buy Group Tour Operator Rupesh Tailor, Everest Research, 8 June 2019 Fosun Sky News has this morning reported that Fosun is in talks to buy Thomas Cook’s Group Tour Operator business and is being advised by JP Morgan. Discussions are said to be at an early stage and it is not certain a …

Lowell FY 2018 Results – Reiterate Sell Recommendation Rupesh Tailor, Everest Research, 15 April 2019 Summary We reiterate our sell recommendation on Lowell’s £ 8.5% senior secured bonds at 94.25 (10.5% YTW, Z+933) and our avoid recommendation on all other Lowell bonds and CDS   Our updated base, stress and bull valuations (probabilities of 50%, 45% and 5% respectively) on …

Cabot FY 2018 Results – Modestly Improving But Not Enough To Go Long Rupesh Tailor, Everest Research, 1 March 2019   Summary   We view Cabot’s 2018 performance as modestly improving (both financially and in terms of business profile) and, in our opinion, stronger than Arrow Global’s. Cabot’s all-in net IRR (i.e. after collection activity costs and an allocation for …

Arrow Global FY 2018 Results – Weaker Cash Flow Than Headline Figures Suggest Rupesh Tailor, Everest Research, 28 February 2019   Summary   Whilst most of Arrow Global’s KPIs (Adj EBITDA, ERC, underlying profit after tax etc) achieved the kind of growth we have become accustomed to, our own estimate of 2018 steady state free cash flow (at £8m, c. …

Together Q2 2019 Results – Still Concerned About Loan Book & Liquidity Risk Rupesh Tailor, Everest Research, 22 February 2019   Key observation #1 – Q2 2019 results, at face value, are consistent with bulls’ thesis. What’s not to like about a business with: (1) high nominal rates (weighted average 9.2% at Q2 2019) on secured loans backed by property on …

Intrum Q4 / FY 2018 Results – Leverage Is Really 5x, Not 4.3x? Rupesh Tailor, Everest Research, 21 February 2019 Key observation #1 – We estimate Intrum’s pro forma (PF) 2018 net debt/Adj EBITDA to be c. 5.0x versus the 4.3x reported by the company, accounting for (structurally senior) debt in the Intrum-Intesa debt purchase joint venture Key observation # 2 …

Hoist Q4 / FY 2018 Results – Substantially deteriorated debt purchasing economics in 2018 Rupesh Tailor, Everest Research, 20 February 2019 Key observation #1 – Remaining 180 month gross money multiple of < 1.3x on 2018 portfolio purchases implies negative remaining lifetime cash generation on these purchases Key observation # 2 – Hoist potentially faces an effective c. 8.3x increase in capital …